A federal appeals court ruled that Nevada can enforce state gambling laws against Kalshi, rejecting the company's argument that its sports contracts are financial instruments exempt from state regulation. The US Court of Appeals for the 9th Circuit issued a unanimous decision against Kalshi, affirming a lower court order that allows the state to police these markets.
The ruling directly addresses whether the federal Commodity Exchange Act preempts state gaming laws. The Nevada Gaming Control Board stated that the 9th Circuit emphatically rejected the idea that the federal Commodity Exchange Act overrides Nevada gaming laws for sports-event contracts sold by Kalshi, Crypto.com, and Robinhood. By classifying these contracts as gambling rather than regulated commodities, the decision limits the ability of prediction markets to operate across state lines without local licensing.
Nevada Governor Joe Lombardo, a Republican, confirmed that platforms selling sports-event contracts are subject to Nevada's gaming regulations and must adhere to its legal framework. This stance holds despite efforts by the Trump administration to assist prediction markets in avoiding state-level regulatory hurdles. The panel of three judges, all appointed by President Trump, sided with the state of Nevada over the industry's position.
The decision impacts Kalshi as well as other platforms named in the ruling, including Crypto.com and Robinhood. For these companies, the legal distinction between a "swap" and a "bet" determines which regulatory body has jurisdiction. With the 9th Circuit's affirmation, Nevada has a clear legal path to stop these platforms from offering sports-related event contracts within its borders.